Egyptian cabinet gave the ministry of electricity the green light to negotiate with Italian Eni over the first phase of a huge solar energy project it plans to implement in Egypt.

Sources at the Egyptian Electricity Transmission Company (EETC) told Daily News Egypt that the cabinet has approved implementing a solar energy plant with a capacity of 200MW by Italian Eni, given that the price of the energy produced from the project would be worth the same value received by the EETC to transmit electricity in the Kom Ombo bid for 2.7 cents per kW/h.

The sources added that the officials from the ministry of electricity have notified the Italian company of the cabinet’s decision and invited them to negotiate on the sale price of kW/h. It is scheduled to hold discussions on the implementation of the first phase of solar energy projects by mid-year. “We are waiting to negotiate the value of selling energy to seal the contract,” the source added.

Furthermore, the sources pointed out that the value of purchasing a kW/h for 2.7 cents is the maximum price the Egyptian company would pay to buy solar energy from the private sector. This value may decrease in the competitive bids planned to be launched in the future, known as “auctions”.

The Italian government has signed a memorandum of understanding (MoU) with Italian Eni to implement new and renewable power plants in Egypt with capacity of 1,000MW. Since mid-last year, the Italian company has started negotiations with the ministry of electricity to implement the projects in phases. Eni has carried out intensive negotiations at the end of December to begin implementing the plants.

The company has also demanded from the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) a license to generate electricity from solar energy. The company started addressing companies working in the field of contracting solar energy projects in order to submit technical and financial offers. The companies have not been selected yet.

The ministry of electricity planned to sign contracts for electricity production projects from new and renewable energy plants with the private sector in order to achieve its strategy which mainly seeks to rely on new and renewable energy to produce 20% of the total capacities on the electricity grid until 2022.

The ministry has put forward various contractual mechanisms and systems to implement the projects, including tenders, independent producer systems, the feed-in tariff, net measurements, and decreasing bids. Many Arab and international companies are currently negotiating to implement solar and wind energy stations with capacities ranging from 50 to 100MW in each single project.